Insurance for Project Managers


Microeconomical impact factor for project management – Professional liability (Indemnity) insurance for project managers

By Emīls Pūlmanis

University of Latvia, Professional Association of Project Managers,
State Audit Office of the Republic of Latvia

Riga, Latvia


Project managers have a great deal of responsibilities, whether it’s overseeing production, ensuring key objectives are met or working to complete projects on time and on budget. A project manager, however, could also be held responsible for any errors or omissions that a client feels you may have made during the course of your duties.

Many project managers and companies have Commercial General Liability Insurance in place. Unfortunately, these types of policies typically don’t cover professional services or advice. As a result, project oriented organisations and project managers’ could face legal action and be held personally responsible for any financial damages to the client.

Paper analyse professional liability (indemnity) insurance types and impact factors in project management as risk cost reduction as well as insurance environment in the European Union member state – Latvia. Empirical research and insurance companies’ survey shows that there is still different approach of defining project management practices and project managers’ responsibility giving their professional services. That leads also to problems what causes by lack of regulatory framework of project management recognition as professional service.

Key words: Project management, project manager, professional liability insurance, risk management.

JEL code: D80, G2, G32, O22.


Risk management is one aspect of project management and like quality management, environmental management and safety management it is about the project or the service we deliver to our clients. Liability management on the other hand is about managing the impact of claims for loss on our business. Project management is described also as activities what implemented in risk environment, what requires to take appropriate management steps to reduce risks at micro-economical level in each project.

Paper analyse project management micro-economical aspects as risk limitation factor choosing professional indemnity insurance for project managers. As a case study author analysed professional liability insurance environment in EU member state – Latvia.

Relevant provisions depend on the nature of the project. However they are usually governed by the conditions specified by the forms of ‘model’ contracts/agreements issued by professional bodies or those in common use in the construction industry. Typical examples of insurances applicable to construction projects include:

  • Contractors’ all-risk (CAR) policies, usually covering loss or damage to the works and the materials for incorporation in the works; the contractor’s plant and equipment’s including temporary site accommodation; the contractor’s personal property and that of his employees (e.g. tools and equipment). The CAR policy is normally taken out by the contractor but should insure in the joint names of the contractor and the client (employer). The subcontractors may or may not be jointly insured under the CAR policy.
  • Public liability policy – this insures the contractor against the legal liability to pay damages or compensation or other costs to anyone who suffers death, bodily injury or other loss or damage to their property by the activities of the contractor.
  • Employers’ liability policy – every contractor will have this either on a companywide basis, covering both staff and labour, or on a separate basis for the head office and for each site separately.

Professional indemnity (PI) – the purpose of this is to cover the liabilities arising out of ‘duty of care’. Typically, the consultants (including the project manager) will require this policy to cover their design or similar liabilities and liabilities for negligence in undertaking supervision duties. In the case of a design and build contract, the contractor has to take out a separate PI policy, as designing is not covered by the normal CAR policy (Code of Practice for Project Management for Construction and Development).


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Editor’s note: Second Editions are previously published papers that have continued relevance in today’s project management world, or which were originally published in conference proceedings or in a language other than English.  Original publication acknowledged; authors retain copyright.  This paper was originally presented at the 5th Scientific Conference on Project Management in the Baltic States, University of Latvia, April 2016.  It is republished here with the permission of the author and conference organizers.



About the Author

Emīls Pūlmanis

Riga, Latvia



Emīls Pūlmanis
is a member of the board of the Professional Association of Project Managers in Latvia and development project manager at State Audit Office of the Republic of Latvia. He has gained a BSc. in engineer economics, a professional master’s degree in project management (MSc.proj.mgmt) and currently is a PhD candidate with a specialization in project management. He has elaborated and directed a number of domestic and foreign financial instruments co-financed projects. He was a National coordinator for a European Commission-funded program – the European Union’s financial instruments PHARE program in Latvia. Over the past seven years he has worked in the public administration project control and monitoring field. He was a financial instrument expert for the Ministry of Welfare and the European Economic Area and Norwegian Financial Mechanism implementation authority as well as an expert for the Swiss – Latvian cooperation program as a NGO grant scheme project evaluation expert. He has gained international and professional project management experience in Germany, the United States and Taiwan. In addition to his professional work, he is also a lecturer at the University of Latvia for the professional master study program in Project management. He has authored more than 35 scientific publications and is actively involved in social activities as a member of various NGO’s.

Emils can be contacted at [email protected].

To view other works by Emils Pulmanis, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/emils-pulmanis/